Many writers dream of giving up their day jobs and writing full time, but because of the highly variable nature of monthly book royalties, it can be difficult to judge when the time is right to go it alone.
As writers, we don’t have the benefit of a fixed monthly income. We can’t count on $X per month. In fact, we have no idea what our income may be from one month to the next, and this makes it impossible for us to budget on a month-to-month basis. Full-time writers must plan ahead, or they may find themselves scrounging their couch cushions for pennies during a lean time.
Here are ten questions that will help you decide when the time is right to pursue a career as a full-time writer:
- Do I have another (regular) source of income? If your spouse or significant other is employed for a steady wage, then you may be able to make the leap to full-time writer earlier. Having a dependable fixed amount of money coming into your household means you may have a better cushion in the leaner royalty months.
- What are my average monthly expenses? Car, house, food, clothing, rent, insurance, taxes, business expenses? Add them up.
- How much debt do I have?
Credit cards, school loans, other loans. One great way to get yourself in trouble as a full-time writer with a highly variable monthly income is to neglect your debt. The more debt you pay down, the better off you’ll be in the long run. No more compounding interest. But it’s hard to pay for something you already own, and much more tempting to buy something new and shiny to play with. - Where will I get health insurance, and how much will it cost?
Chances are that your health insurance costs will go up. Find out what you can expect before you quit your day job. - How much savings do I need to hold in reserve for taxes and emergencies?
You cannot budget month to month as a full-time writer. You have to plan ahead. Save for quarterly income taxes, new tires for your car, a new alternator. - What luxury items do I not wish to give up? Cell phone, TV service, travel, (ahem) a horse? In an emergency, these items could be cancelled or sold, but who wants to go without their cell phone? Not me. (And my horse ain’t going anywhere. Ever.)
- Do I have control of my spending habits? Seriously. Do you pay attention to the way you use your resources? Where does your money go? Does it just seem to disappear?
- What is my worst month’s income in the past year?
Look at this number as your base salary. This is the least you may expect to earn, even when times are tough. (Of course, this may not be the true low point, but it’s a good place to start.) - What is my best month’s income in the past year? Now subtract your worst month’s income. What’s left is your bonus money. Yay! Bonus money! Now, what do you do with it? You pay down your debt and save for taxes and emergencies. Then, what’s left over can be put toward non-essential luxuries. Do the numbers balance out?
- Can I live comfortably on my worst month’s income? This is the most important question of all. If the bottom fell out of the book market, and you reverted to your lowest sales ever, would you be able to live comfortably on your worst month’s income? If so, then it’s safe to consider quitting your day job. If not, keep working because each new book will bring you closer to your goal.
Taking an average of your monthly income and making the decision based off that number seems like the more accurate method of assessing your budget.
You could budget that way if you are vigilant about your long-range planning. Here’s the rub: Your average income is always changing, but your “worst income” doesn’t change every month. It’s as close as you can get to a fixed number in an unfixed industry.
I’ve budgeted with a highly variable monthly income for the last fifteen years, and I can tell you from experience that living as if your average monthly income is your dependable monthly income will leave you with months during which you are not going to be able to pay your bills.
Remember, the average is the middle of your income range. Some months, you’ll earn far more, but other months, you’ll earn far less. What do you do when you hit a “less” month? Did you save from the previous “more” or “average” month? Or did you see that month’s money as your regular salary and, therefore, safe to spend?
Basing your decision off your worst month’s income will help ensure that your bills will all get paid and you’ll have fewer sleepless nights…unless you’re trying to work out a plot point. Then, all bets are off.